Problem Statement
Toyota’s neglect was the major problem that led Toyota Motors Corporation to the loss of consumers’ trust due to the accelerator pedal crisis. The 2009 Toyota accelerator pedal crisis resulted in the Japanese multinational automotive manufacturer becoming the subject of media and public surveillance after multiple injuries and deaths were attributed to accidents caused by unintended acceleration of its cars. The company recalled approximately $4.2 million vehicles, which hurt its brand significantly (Austen-Smith, et al., 2017). Moreover, the total loss of Toyota due to the crisis was estimated to be around $20 billion (Hammond, et al., 2013). This valuation drop can be directly interpreted as a lack of trust in Toyota Corporation by investors and consumers, as well as the massive scale product recall due to a severe defect in the company’s products.
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Notably, although Toyota eventually stopped the defective production on a large scale, it did so after a prolonged period of ignoring customers and denying the allegations regarding the faulty accelerator pedals. The malfunctioned pedal not only hurt the corporation economy but also adversely impacted Toyota’s image. Apparently, the company’s mission statement highlights that Toyota seeks to provide customers with the top valued services and products so that they experience the most fulfilling ownership experience (Sohal, et al., 1994). However, the way the company approached the issue contradicts the statement.
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The accelerator scandal that led to the plummeting of the company’s stock valuation might have developed a purchasing opportunity for a few investors. However, it largely discouraged investing in the company because of the uncertain future of the company. Apart from this, it had an adverse effect on Toyota’s sales and revenue generation. Thus, the faulty accelerator in Toyota’s vehicle and the way the company handled the crisis impacted the company’s competitive advantage profoundly.
Justification of the Problem
When the issue of uncontrolled acceleration was brought to the attention of Toyota corporation management for the first time, they did not act urgently. The first complaint concerning uncontrolled acceleration occurred when a Toyota Camry was involved in an accident, which claimed its driver’s life (Austen-Smith, et al., 2017). Toyota and the family that had been affected settled this illegitimate fatality suit outside the courtrooms for a concealed amount. Apart from this, Toyota management responded to the complaint in a manner that confused the public instead of claiming that they were examining the issue and they would give a comprehensive report upon the conclusion of their investigation. Namely, they shocked everyone with their shallow conclusion that attributed the issue of the driver’s error. By 2000, the number of accidents connected with the accelerator issue had risen to 52 cases in the US only (Lee, et al., 2020). According to Lee, et al., the faulty accelerator pedal issue was not new in Toyota Corporation as it had occurred in the previous years. Moreover, since 1986, the National Highway Traffic Safety Administration (NHTSA) had been frequently asking Toyota to recall its faulty vehicles (Lee, et al., 2020). Thus, by the time the crisis occurred, Toyota has enough time to rectify the issue but, in fact, was acting negligently.
The undesired acceleration had reoccurred during consumers’ usage and production testing in a period from 2003 to 2007. Such a situation resulted in NHTSA to examine Toyota automotive accelerator problem (Finch, 2009). Apparently, the company dealt with the accelerator issue internally in both testing and production. After a series of investigations, the NHTSA established that the issue was caused by isolated cases of negligence during the manufacturing process.
Despite Toyota management’s understanding of the problem, the corporation ignored the numerous complaints from customers. After several complaints, the NHTSA carried out an engineering analysis of the company’s vehicle, which concluded that the floor mat was the leading cause of accelerator issues. This conclusion leads to the recall of 55,000 cars.
Since the company recalled 55,000 cars in 2007, more than 8.5 million vehicles have been recalled by the company due to various safety issues (O’Rourke, 2010). Moreover, Toyota went ahead to temporarily suspend the manufacturing of different types of impacted vehicles in 2010 in an attempt to solve reasonable accelerator issues. However, it was not earlier than 5th February when the company CEO, Akio Toyoda, apologized to the customers and pledged adherence to quality control. Nevertheless, this apology was too late as undesired acceleration connected with Toyota vehicles had already claimed dozens of lives.
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Alternative Courses of Action
The following alternative course of action should be considered for Toyota Motors Corporation to restore consumers’ trust and confidence. First, replacing top management. Second, special management training. Third, transferring trust. Fourth, enforcing and implementing rules and regulations. Fives, emphasizing accountability and transparency.
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Alternative Solutions evaluation
Replacing Top Management
After the crisis such as the one experienced by Toyota Corporation, which attributes management negligence, change of personnel may be very essential to restore consumers’ trust. The advantage of management replacement as a way to restore consumer trustworthiness is an easy solution to show the consumers that the organization has reacted to their complaints. Apart from this, changes in management also save money and time invested in non-performing personnel. The disadvantages of changing management include loss of experience, skills, and knowledge. Moreover, it could result in loss of time and money while training new managers, and the risk of hiring new management with similar problems of responsibility.
Special management training.
Special training will not only assist the staff on how to manage professional negligence but it will also present an essential opportunity to make the knowledge basis of all staff homogeneous. Apparently, this will result in efficient group work and allow employees to understand each other better. Among the benefits of special training are enhanced employee performance, improved employee ethics and satisfaction level, addressing weaknesses, increased productivity, enhanced quality standard, and improved organization profile and reputation. The main disadvantages of this alternative action include delayed project accomplishment due to employee absenteeism as they attend their training and extra cost for training.
Rules and Regulations
Enforcing standards and rules is among the most common means to regain trust, which are set by either the organization itself or outside regulators. The advantage of imposing law and regulation, especially when the company puts them voluntarily, is essential as it indicates that the organization is devoted to operating differently and learn from the previous experience. The disadvantages of imposing very tight rules and regulations can lead to the suffocation of growth and innovation and lack of flexibility (Coglianese, 2016). It also suggests that the corporate does not trust its management and staff, which will affect communication at work further.
Accountability and Transparency
Disclosing information indicates that the organization has nothing to conceal. If the company becomes more accountable and open it will automatically restore trust. The disadvantage of transparency is that it may disclose bad news, while there is a strong incentive for an organization to seal its failures. Transparency can lead to unwanted consequences such as leaders transmitting risk or blame on their subordinates.
Transferring Trust
Certifications or endorsement are means in which trust can be shifted from one organization to the other. This can also be done by appointing an admired public figure to the top management or creating links with a trustworthy institution (Doorley, et al., 2020). Apart from this, transferring trust can assist in managing the crises and the company to restore its credibility. The disadvantage of this mechanism is that it depends on the availability of a willing, trusted third party to collaborate. The strategy is associated with the risk of destroying a third party reputation.
Recommendations and Conclusions
Apparently, the best recommendation for Toyota Motors Corporation is to conduct special training with its internal stakeholder including all employees and suppliers on how to handle safety issues. The safety issue is a very critical point, while mishandling may lead to non-repairable damage to both consumers and the company at large. Toyota must provide rank-based training on safety to its executives, managers, mid-level employees, and new employees. The scope of safety handling training should be expanded to include the suppliers as well. Toyota should also provide special training to its staff fraternity on how to respond to customers’ complaints, the effective procedure on how to assess the problem, and the cause of action to remedy the situation without causing many inconveniences to the customers. The training should also include early methods to identify any problem associated with the company’s vehicles. The company should also provide its supplies with special training on how to check, assess, and rectify any issue reported by a consumer and how to report the details and information of any remedial actions in order to prevent any recurrence.
Ways to Evaluate the Success of the Implementation
- Examine if stakeholders are aware of the information that is essential to the organization. This can be achieved through the use of questionnaires that will be filled by various stakeholders.
- Use interviews, surveys, and focus groups on incorporating various target audience’s feedback into the evaluation process.
- Evaluate the coverage of the media on the crisis by employing a communication firm. Was the part of the company’s story broadcasted? If not, why it should change the problem feedback? Most of the time, the company in crisis fails to respond quickly with facts, which leads the media to depend on secondary sources with limited reliable information.
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